Intangible assets
Acquisition of intangibles
Expenditure on research activities is recognized as an expense in the period in which it is incurred.
An internally-generated intangible asset arising from development is recognized to the extent that all of the factors for capitalization have been satisfied as specified in IAS 38:
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The technical feasibility of completing the intangible asset so that it will be available for use or sale. |
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The intention to complete the intangible asset and use or sell it. |
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The ability to use or sell the intangible asset. |
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How the intangible asset will generate probable future economic benefits. |
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The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset. |
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The ability to measure reliably the expenditure attributable to the intangible asset during its development. |
The amount initially recognized for internally-generated intangible assets is the sum of the various expenses needed to generate the related intangible assets. Amortization starts from the date when the intangible asset first meets the recognition criteria listed above. These intangible assets are amortized on a straight-line basis over their estimated useful life (ten years). Where no internally-generated intangible asset can be recognized, development expenditure is recognized in profit or loss in the period in which it is incurred.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortization and accumulated impairment losses, on the same basis as intangible assets that are acquired separately. As of December 31, 2017 the amounts capitalized we associated with the registration of the Company’s patents.
Intangible assets acquired through a business combination
Intangible assets, including in-process research and development projects, acquired in a business combination and recognized separately from goodwill are initially recognized at their fair value at the acquisition date (which is regarded as their cost).
Subsequent to initial recognition, intangible assets (except for in-process research and development projects) acquired in a business combination are reported at cost less accumulated amortization and impairment losses. Such intangible assets are amortized over their useful economic lives, which will depend on their related patent life (up to fifteen years). Goodwill arising from business combinations is not amortized but reviewed annually for impairment.
Subsequent to initial recognition, in-process research and development projects acquired in a business combination are reported at cost and are subject to annual impairment tests until the date the projects are available for use, at this moment the in-process research and development projects will be amortized over their remaining useful economic lives, which will depend on their related remaining patent life.
Patents, licenses and other similar intangible assets acquired separately
Costs related to the registration of internally-generated intangible assets (patents) are recognized as intangible assets.
Licences, patents, or rights separately acquired are amortised over their estimated useful lives, generally not exceeding 20 years, using the straight-line basis, from the time they are available for use. The estimated useful lives for determining the amortisation charge take into account patent lives, where applicable, as well as the value obtained from periods of non-exclusivity. Asset lives are reviewed, and where appropriate adjusted, annually.
Computer software
Software licenses and software development costs are measured at purchase cost and are amortized on a straight-line basis over the economic useful life (three years). They are acquired from external providers.